Tag: social media

Exam Alert: SEC clarifies standards for filing social media communications by investment companies

On March 15, 2013, the SEC issued guidance for investment companies regarding their communications over social media. Noting that investment companies have been filing certain communications unnecessarily, the SEC describes which types of communications should or should not be filed, providing examples of each. Continue reading

On March 15, 2013, the SEC issued guidance for investment companies regarding their communications over social media. Noting that investment companies have been filing certain communications unnecessarily, the SEC describes which types of communications should or should not be filed, providing examples of each.

 

Communications that should be filed include:

-Discussion of the specific elements of the performance of a fund

-Promotion of the performance of a fund

-Communication initiated by the issuer that talks about the merits of the fund

 

Communications that do not need to be filed include:

-Mention of an investment company that does not address the investment merits of the fund

-Talking about performance with no mention of any specific element of a fund’s return

-Factual introductory statements that include a link to the fund’s prospectus

-Factual responses to queries that do not address the investment merits of a fund

 

To see examples of what needs to be filed and what does not, check out the SEC guidance.

 

For further analysis of the SEC release, along with a general discussion of the intersection of regulation and social media, check out the blog post by Augie Ray at http://www.experiencetheblog.com/2013/03/regulators-to-financial-service-stop.html. Mr. Ray, an ex-Forrester analyst (source), asserts that regulators are encouraging firms to make more active use of social media, and that this guidance is part of that trend.

 

Source: SEC Release 2013-40: SEC Issues Guidance Update on Social Media Filings by Investment Companies

 

This alert applies primarily to the Series 6, Series 7, and Series 26. It may also be relevant to the Series 24, Series 62, Series 82, Series 99.

Exam Alert: SEC staff provides compliance suggestions for IAs using social media

On January 4, 2012, the SEC staff provided suggestions for investment advisers using social media to help them comply with communication and recordkeeping rules. Of particular note, the SEC staff stated that the client use of the “like” button could count as a testimonial under the Investment Advisers Act. Continue reading

On January 4, 2012, the SEC staff provided suggestions for investment advisers using social media to help them comply with communication and recordkeeping rules.  Of particular note, the SEC staff stated that the client use of the “like” button could count as a testimonial under the Investment Advisers Act.  Investment adviser advertisements may not include testimonials.  Note that written communications addressed to more than one person are considered advertisements.

Source: National Examination Risk Alert: Investment Adviser Use of Social Media

This alert applies to the Series 65, Series 66, Series 24, Series 55, Series 62, and Series 82.

FINRA Alert: New rules for social media and personal device use for business purposes

Since FINRA first released rules regarding these issues back in 2010, many in the finance industry have raised questions and concerns over their abilities Continue reading

Since FINRA first released rules regarding these issues back in 2010, many in the finance industry have raised questions and concerns over their abilities to comply with these rules while keeping up with explosion of social media.  Last week, FINRA responded to these concerns by releasing several guidelines clarifying rules surrounding use of social media websites and personal devices for business purposes.  For example, some of the guidelines included the following:

  • If an individual posts a statement on Twitter on behalf of the firm, that will likely constitute an interactive statement and not require prior approval by a firm’s registered principal.  However, if that statement is then posted on a blog, becoming a static statement (and therefore an advertisement), prior approval is necessary.
  • Whether a statement is interactive or static, recordkeeping rules still apply.  This means that individuals and/or firms may not use social media sites or devices that automatically delete any posts.
  • Individuals may respond to third-party business-related posts on their personal social media site without violating FINRA guidelines.  However, responses must conform to firms’ individual policies regarding these types of posts.
  • As long as firms are able to keep records and supervise activity, individuals may use their own personal devices (e.g. a smart phone or a tablet) to conduct business and access business applications.  Something to keep in mind when using a personal device to conduct business: firms are allowed to supervise all communications made on personal devices, including personal communications, if the device is ever used for business purposes.

These are just a sampling of issues the recent FINRA Regulatory Notice addressed.  Please click here to review the full notice.